Lorenzo, the much-delayed software package earmarked for a central role in the NHS's £12.7bn IT overhaul, remains mired in development glitches and is still struggling to get out of the technical design phase, according to a confidential document seen by the Guardian.

The document paints a very different picture to the one given earlier this week by the NHS chief executive, David Nicholson, and his interim head of IT, Gordon Hextall, when they appeared before parliament's public accounts committee.

Asked why, after so many disappointments, trusts should have faith in the latest set of delivery promises, Nicholson said: "We are in a position now where Lorenzo actually has a product and it would be ridiculous now to just dump that."

But a confidential report, seen by the Guardian and Computer Weekly, makes clear delivery deadlines slipped several months ago - though the delays were not made public. The report was produced by CSC, the US consultancy firm delivering Lorenzo in the north, Midlands and east of England.

The document in part blames delays on serious staffing issues at IBA, the firm behind Lorenzo. It also flags as "red" concerns that resources have been diverted in order to meet the first milestone deadline for Lorenzo release 1, a less complex piece of software providing clinical functionality. This has slowed progress on release 2, the patient administration system that forms the core of the care records service.

With developers struggling to get the relatively small release 1 ready at three pilot sites, CSC believes the more substantive release 2 is unlikely to get much beyond early stage tests by the end of the year. Officially it is scheduled to be live in hospitals by October.

Previous delays to Lorenzo contributed to the near-collapse of the Manchester-based software firm iSoft, but the business was rescued by a smaller Australian rival, IBA, which took it over last summer. Lorenzo had initially been due to be rolled out from March 2004 and has missed a series of revised delivery dates since.

Two years ago, an earlier internal CSC progress report on Lorenzo was leaked to the Guardian. It said: "There is no well-defined scope and therefore no believable plan for releases."

Officially, Lorenzo release 1 was due to go live at Universities of Morecambe Bay Trust at the start of this week, but was delayed. "It will go live when the quality is right," Nicholson told the committee of MPs on Monday. "The software is actually in the trust and is being tested."

Meanwhile, Nicholson and Hextall were surprised to learn from one committee member, Richard Bacon, that CSC had been offering some trusts an alternative system not owned by IBA. Asked if they were aware the US consultancy firm had two months earlier been "hawking around" the Portuguese system Alert at a healthcare IT conference in Harrogate, the men appeared baffled. "I was not aware of that," said Hextall.